2013 State of the. enterprise cloud report

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1 2013 State of the enterprise cloud report

2 The 2013 State of the Enterprise Cloud Report examines the factors driving cloud adoption; the growth in demand for virtual machines (VMs), memory, and storage; and expectations for the future of the cloud. executive summary Enterprises and governments across enterprise-grade cloud services. It the globe have unique challenges and considers the factors driving adoption; requirements when it comes to cloud the growth in demand for VMs, memory, computing. These organizations have and storage; and expectations for the ever-increasing needs for secure, future of the cloud. reliable, and redundant access to the cloud. To fully embrace that cloud, they Since 2008, Verizon Terremark s cloud demand business continuity services and services have focused on the key needs dedicated connectivity to mission-critical of enterprises. With enterprise cloud data and applications. facilities across Asia, Europe, Latin America, and North America, we can meet This report, which draws upon Verizon the requirements of organizations in a data between January 2012 and June wide range of sectors such as finance 2013, examines current cloud adoption and banking, healthcare, government, and usage trends both in terms of and technology. This includes addressing how organizations are deploying cloud their specific regulatory, policy, and technologies and what they want from elasticity needs. WHAT WE LEARNED n The use of cloud-based storage has increased by 90 percent during the time period studied, and cloud-based memory by 100 percent; this has been driven largely by the shift of business-critical applications to the cloud. n Increased cloud efficiencies means that the number of VMs deployed is growing more slowly than memory and storage requirements 35 percent over the same period. n Organizations are now using cloud for more than development and testing. They re running external-facing and critical business applications in the cloud production applications now account for 60 percent of cloud usage. n Enterprises increased their average monthly spend on cloud by 45 percent. As cloud environments become more mainstream, enterprises use it for more business functions. n With more critical applications residing in the cloud, uptime and availability are now essential. n Security and related compliance requirements are driving hybrid cloud growth in the enterprise and public sector, and require increased focus on your cloud provider s data center. n Growth in big data will drive cloud adoption as a result of the increasing demands and volumes associated with data management and analysis. page State of the enterprise cloud report

3 Nearly half of respondents in a recent survey by the Economist Intelligence Unit said that when considering new investments, they evaluate cloud options before traditional models 1. current state of the enterprise cloud Almost any enterprise faced with building, managing, maintaining, and supporting in-house infrastructure must consider cloud services, which have become far simpler, efficient, and more effective. Nearly half of respondents in a recent survey by the Economist Intelligence Unit said that when considering new investments, they evaluate cloud options before traditional models 1. The reasons are clear: Cost: Makes managing expenses easier by offering the ability to pay for reserved, dedicated capacity, or by the instance. Provisioning speed: Cuts provisioning times to minutes. Compliance: Helps organizations address security compliance with regulation and industry standards such as the Payment Card Industry (PCI) and Good Anything Practice (GxP). Focus: Reduces the time, cost, and risk of managing in-house IT infrastructures, freeing organizations to focus on their core business. Performance: Increases the responsiveness and consistency of web-based and other applications. Accessibility: Enhances the availability of applications, allowing users to work from almost any device, virtually anywhere. rise OF the VIRTUAL MACHINES 35% INCREASE IN the number of VMs deployed among enterprises from january 2012 to june 2013 The number of VMs software applications that run programs like a traditional computer deployed by enterprise customers has increased 35 percent since the start of Although organizations frequently deploy and tear down VMs according to business needs, the overall trend is consistently upward. Enterprises that adopted cloud services early have increased their cloud investment by 45%. The growing number of VMs indicates that enterprises are moving more workloads to the cloud. We ve found that once enterprises successfully deploy an application as a cloud-based service, they tend to move others to the cloud as well. Enterprises that adopted the cloud early have significantly increased their investments over time. From July 2012 to June 2013, our customers have increased their monthly spending by 45 percent. 1 EIU Cloud-Enabled Business Model Survey page 3

4 100% INCREASE IN MEMORY USE 90% INCREASE IN storage USE MEMORY AND STORAGE DEMAND IS GROWING fast As the number of VMs deployed has increased, so too has the demand for memory and storage. Over the same period, the use of cloud-based memory increased by 100 percent, and cloud storage by 90 percent. These increases have dramatically outpaced the rise in the number of VMs as enterprises deploy more production and business-critical applications with higher memory and storage demands. Additionally, as they move more compute-intensive workloads to the cloud, enterprises are becoming adept at optimizing cloud resources. Today, organizations can deploy the equivalent of three to four physical servers to one VM and gain up to three times more performance than they did in the past. Many are also writing their own application programming interfaces (APIs) to start and stop servers in the cloud. Today, organizations can deploy the equivalent of three to four physical servers to one VM and gain two to three times more performance. This growing skill at managing cloudbased workloads makes it possible to deploy more applications, requiring more memory and storage requirements, without needing to deploy VMs in an equal ratio. Sixty percent of applications are web-based and Internet-facing, with the cloud providing a more cost-effective management solution. migrating critical applications to the cloud Sixty percent of cloud applications are web-based and Internet-facing. These applications are particularly suited to a cloud environment, as they require proximity to the backbone of the Internet and are cost-effective when managed through the cloud instead of a physical infrastructure deployment. This is probably why e-commerce and applications were the earliest to be cloud-enabled. As cloud security and reliability has improved, enterprises have begun deploying back-office applications such as manufacturing and resource planning software applications (Figure 1) these applications now account for 23 percent of all cloud use. They also have high storage requirements and constantly changing usage patterns, making them ideal for the cloud. These back-office applications need enterprise-grade cloud services with high levels of availability, security, and industryspecific requirements. page State of the enterprise cloud report

5 Back-office applications that have high storage requirements and constantly changing usage patterns now account for 23 percent of all cloud use. Figure 1 types of applications on enterprise cloud 70% 60% 50% 40% 30% 20% 10% 0% internetfacing production applications DEVELOPMENT ENVIRONMENT STAGING ENVIRONMENT PROOF OF CONCEPT INTERNALfacing production applications OTHER In examining the data, we see three areas where cloud will drive continued innovation: n Enabling new retail services: Online retailers are spending more on cloud services to implement Internetfacing, point-of-sale, and online purchasing applications. n Increasing worker productivity: Companies are turning to the cloud to realize their mobility strategies by giving employees and business partners access to corporate resources. The use of virtual desktops and thin- or zero-client applications (applications that require no local memory to run) is enabling people to be more productive, regardless of location or devices used. n Leveraging big data: Customers repeatedly cite the need to prepare for an oncoming flood of big data, and they re preparing by moving workloads to the cloud so they can store, access, and process massive amounts of data more easily and cost-effectively. For cloud to deliver on its potential, it must deliver enterprise-level security and consistent performance. In fact, availability and performance are rated by users as the most important characteristics for cloud (based on a study conducted of Verizon customers). Using the cloud for critical infrastructure and business operations demands near-perfect reliability and availability of resources and bandwidth. Security and compliance are becoming common requirements for any cloud solution, and are therefore more intently scrutinized. CLOUD CHARACTERISTICS RATED BY IMPORTANCE 1. UPTIME Availability of cloud services 2. PERFORMANCE Speed of processing, storage, and network resources 3. user interface Design and ease of use of customer portal 4. api Design and features available, and application programming interface page 5

6 Many enterprises are still in phase one of cloud adoption moving low-priority and commodity services to the cloud. Hybrid cloud options are attractive to public sector organizations and companies subject to strict security or regulatory policies. how enterprises are adopting cloud The cloud is changing the way companies think about everything from infrastructure to application design and licensing. Our data tells us enterprises are moving more critical infrastructure to the cloud, but there s still a long way to go. Many organizations are just beginning this process, but progress will accelerate as they see other companies realize its benefits and vendors demonstrate that cloud can handle missioncritical, enterprise-level applications. Many enterprises are still in phase one of cloud adoption moving low-priority and commodity services to the cloud. But forward-thinking organizations are looking for closer integration of cloud services with their own infrastructures and applications by leveraging a hybrid model to create differentiation and competitive advantage. There are still first-mover benefits to be gained from the cloud, but that window is rapidly closing. Already some companies are developing cloud strategies in response to their competitors actions, fearing that if they don t, they ll be at a disadvantage. Hybrid clouds allow for many of the cost and flexibility advantages of the cloud while allowing companies to keep greater control over some data and applications. In essence, some of their data is kept behind their firewall, away from the cloud. This option is especially attractive to public-sector organizations and companies subject to strict security or regulatory policies. But enterprises taking the hybrid approach are more focused on enterprise-level capabilities when it comes to availability and security. Again, as critical applications migrate to the cloud even hybrid clouds the cloud needs to mature to support the needs of the enterprise. cloud s impact on I.T. Many enterprises are currently encouraging innovation by using APIs to automate cloud-based processes. As technologies continue to mature, we expect services to feature capabilities such as auto-scaling and customization, and configuration of individual application performance levels. Eventually, cloud offerings will become tightly integrated with clients own databases, platforms, and applications, simplifying and harmonizing orchestration across the business. Cloud services are also changing who purchases IT services. The traditional model enterprise IT professionals buying infrastructure-intensive hosting, colocation, and professional services is being challenged with line-of-business managers and heads of enterprise business units now purchasing cloud services instead. This shift is often driven by the desire to increase innovation and speed to market, along with the perception that in-house IT is failing to support them in these efforts. page State of the enterprise cloud report

7 Line-of-business managers and heads of enterprise business units are purchasing their own cloud services, enabling them to meet specific business objectives in a more efficient manner. Cloud will continue to change the way enterprises view technology, their workforces, and their businesses. We believe that, not only does cloud-based infrastructure offer the increased agility that the lines of business want, it also offers in-house IT teams the framework they need to meet these demands through official channels. Eventually, cloud offerings will become tightly integrated with clients own databases, platforms, and applications, simplifying adoption across the business. Transforming Application Development Cloud computing is dramatically affecting the way new applications are being developed and licensed. For some of today s mission-critical enterprise systems, current software licensing models penalize customers who move to the cloud. These models are changing, however, and new applications will be developed and structured for use with cloud in mind. Additionally, the open-standard cloud environment means simpler development. Developers will no longer write separate code for multiple platforms, and physical infrastructure features or capacities won t limit their applications. In fact, many applications written for cloud environments will not run on physical infrastructure at all. Accelerating Innovation With more infrastructures virtualized and more applications in the cloud, enterprises don t need to focus as much or invest anywhere near as much on building scalability into those infrastructures and applications. These significant time and cost benefits are enabling organizations to experiment and innovate in new and potentially exciting ways. Enabling New Business Models Many exciting new applications are already in widespread use. Healthcare providers are taking advantage of the increased reach and scalability of cloud computing to deliver new services such as teleradiology and real-time remote diagnosis quickly and cost-effectively. Content providers are leveraging the cloud s reach and capacity to stream music, movies, and TV shows directly to customers, bypassing established networks. Cloud s disruptive potential has already impacted many industries, and we expect that disruption to continue, generating considerable new opportunities for growth and innovation. CONCLUSION Enterprise cloud has reached a tipping point. Organizations have seen the benefits cloud can provide both in efficiency and cost and are ready to move an increasing number of mission-critical applications to cloud-based infrastructure. However in order for this to happen, cloud service providers must deliver to enterprise-grade availability and security. If organizations maintain a steady focus on the business benefits of cloud computing, they will be well-suited to meet the objectives of C-level management with a positive effect on cohesion, collaboration, and revenue. page 7

8 About Verizon Enterprise Solutions Verizon Enterprise Solutions creates global connections that generate growth, drive business innovation, and move society forward. With industry-specific solutions and a full range of global wholesale offerings provided over the company s secure mobility, cloud, strategic networking, and advanced communications platforms, Verizon Enterprise Solutions helps open new opportunities around the world for innovation, investment and business transformation. about verizon terremark Verizon Terremark is a leader in can leverage advanced security transforming and securing enterpriseclass IT on a global scale. A unit of controls and certificate-based multi- technologies, including role-based access Verizon Communications Inc. (NYSE, factor authentication. These enhanced Nasdaq: VZ), Verizon Terremark sets security features allow customers to high standards for IT deployments with bring enterprise-class authentication and advanced infrastructure and managed access control through the use of their service offerings that deliver the scale, certificates and tokens to manage cloud security, and reliability necessary to resources. With a global network of data meet the demanding requirements of centers and a comprehensive portfolio enterprises and governments around of secure solutions, Verizon Terremark the world. Verizon Terremark extends is helping enterprises and government federal-grade security controls to all its organizations realize the power and commercial cloud customers. Enterprises promise of the cloud today. Visit verizonenterprise.com to learn more Verizon. All Rights Reserved. The Verizon name and logo and all other names, logos, and slogans identifying Verizon s products and services are trademarks and service marks or registered trademarks and service marks of Verizon Trademark Services LLC or its affiliates in the United States and/or other countries. All other trademarks and service marks are the property of their respective owners.

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